In September 2024, SEBI published a study of individual traders in equity futures and options. It found that 93% of them lost money between FY22 and FY24. Strategy matters, but what keeps a trader in the game is how much they risk on each idea.
The 1% rule
Decide in advance the most you will lose on one trade, as a share of your trading capital. Many professionals keep it at about 1%. With ₹5,00,000 of capital, 1% is ₹5,000.
From risk to quantity
Quantity = amount you are willing to lose ÷ (entry price − stop-loss price)
Example: you plan to buy at ₹200 with a stop-loss at ₹190, a risk of ₹10 per share. ₹5,000 ÷ ₹10 = 500 shares. If the stop is ₹20 away, the quantity halves to 250. The stop decides the size, not the other way round.
In futures and options the same idea works per lot: work out how much one lot loses between your entry and your stop, and keep the number of lots within your 1%.
Three habits that protect capital
- A daily loss limit. For example, stop for the day after two losing trades.
- No revenge trades. A loss is information, not something to win back.
- A journal. Screenshot every trade with the reason, the result and the lesson.
Level 1 covers charges, taxes, stop losses and position sizing before any strategy, because this is where most beginners go wrong.
Your first step into the stock market, the professional way.
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